Investing IPO

IPO Bonanza

11 Different promoters have tapped the IPO market this month. These include Ramky Infra, Orient Green, Eros International, Microsec, Career Point, Cantabil Retail, VA Tech Wabag, Electrosteel ESL, Tecpro Systemts, Ashoka Buildcon and Gallant Ispat.
History has taught us that booms are followed by a bust. Yet every time when the Sensex zooms up, experts say this time it is different. Today the market closed at above 20K figures, so I went ahead to research why this week was chosen by so many promoters. Here is the list:
1. Most investors go for the relative valuations. i.e. if the PE in the industry is 20, and the IPO is at 17, its fairly priced. With stock market at 20k, promoters are getting a good price.
2. 2 year long bear run has made many firms desperate for capital. Hence they want to cash out before the mood changes bearish/cautious.
3. Coal-India. The interesting thing about all these IPOs is that it gives investors ample time to invest the money, wait for a day or two before selling the shares, another 3 days before the money is back in their accounts and ready for investing in Coal India. Now if a company does not go for listing now, it will have to wait for 5-6 weeks before those who invested in Coal India would be ready to invest in that IPO. Who knows where the market would be heading by then.
4. shraadha: September 24 to 7th October is considered inauspicious for any major purchases. No wonder all the IPOs were bunched so close together.
5. I recently discovered that any firm hitting the IPO market after 30th Sptember, would have to publish its Q2 results. No one wonder promoters with inside information want to cash out before they publish any disappointing results.
Usually I share my analysis for important issues. Unfortunately this time there are too many of them for me to publish my research. All I can say is that I did invest 2,00,000/- in Career Point IPO with the belief that I won’t be allotted more than 6-12k worth of shares. So the downside risk is minimal.

6 replies on “IPO Bonanza”

Bonanza for whom? the Promoters?
The mkts have time and again as we have experienced foxed and entrapped the small investors.
Secondly one has to wonder when this rally will peak out? 21300 is RSDs call? what say u?
also we are so entwined with the world mkts where uncertainty has become a norm.
on techpro SPTs only buy reco he cautions This is likely to give listing gains, but one would be better off, to hold it for 6-12 months.
ps will coal india tank like ongc which went from 715 to 690s sometime after its ipo when the mbanker’s mkt makers dump stock ?
the govt has big interests in keeping mkts up till coal India and as we all know it is the biggest player!
also idfc is coming with a bond issue at 8% tax free? will it be a superhit!

i agreee this is the best time to sell the junk and sdefer the purchases… i had been thinking of buying puts (nifty) for 2 weeks now.. but i would agree that there is still steam left which should last for another 2 weeks… however i believe that the market would be rangebound… don’t see another rally coming soon… but no major dips too…
after the coal IPO… not sure… the market sentiments change (take u turns) every 2-3 months… and its hard to predict which way it will go.
but the Q2 results somehow don’t support the rally… Nifty EPS has hardly moved over the years.

True , and echo ur sentiment
There are loads of people /instns sitting on losses of the last bull mkt who will sell at every rally,so there will be rangebound mkts.
True 2 weeks is a very long time…
Also where/when do u see the mkt peak?
gold is crazy above $1300,central banks, sovereign funds buying

honestly my assesment about 5 weeks ago resulted that the market would touch 6000, dip the next day, return back after that and go downwards from there….
but clearly i am wrong…
about gold… never tracked it and I am really curious about its movements… do you have any writeup on it.

gold – didn’t track it either but there is some good analysis on blogs like the big picture etc especially about the depression times and public behavior
the fact that us will continue on the currency debasing track instigating all nations to do the same will keep the interest in gold and stocks going especially here and in ecos where inflation will be a major concern.
the interplay between currency s yields, inflation, stocks and commodities will be very interesting and will sharpen henceforth is what i think, especially in the third world which are inflation sensitive as the govts can no more look the other way as elections will be looming in some time
Countries like Vietnam faced a major crises with hi inflation and a virtual gold based economy just recently

Leave a Reply

Your email address will not be published. Required fields are marked *